Formation of Contract

7 Acceptance

It is the second element of agreement.

Acceptance can be defined as “A positive act in response to offer  OR  an unqualified agreement to all the terms of offer.

The contract comes into effect once the offeree has accepted the terms presented in offer. This is the point of no return, after that the offeror cannot withdraw their offer and both parties will be bound by the terms that they have agreed .

Acceptance can be made through following.

  1. Verbal acceptance   by express words
  2. Written acceptance   through signature on formal document
  3. Acceptance by actions   that is inferred from conduct of both parties


e.g. case law Borden vs. Metropolitan Railway co


Silence does not constitute acceptance. There must be some act at the part of offeree to indicate acceptance. An offeror cannot dictate that his offer shall be deemed to have been accepted unless the offeree actually rejects or accepts it.

Case law Felthouse vs. Bindley 1862

7.1 Counter offer

It should be differentiated from counter offer and request for information because they are not capable of acceptance.

7.2 Communication of acceptance

General rule of acceptance is that it must be communicated to offeror and it is not effective until this has been done. However this rule does not apply in all cases.

7.2.1 Prescribed mode of communication.

In this the method of communication of acceptance is specified or prescribed by offeror and it is required that acceptance would be effective when communicated through the method that was specified. However offeree could use other method but the other method should be equally effective as was prescribed.

Case law Yates building co vs. R J Pulleyn and sons 

7.2.2 No mode of communication prescribed

If there is no mode of communication prescribed, parties should use reasonable mode.

e.g.  Mr. A offers to Mr. B through email and then Mr.B accepted it through letter. it is not acceptable because it is not reasonable reply as Mr. A  requires immediate reply.

Telephone call will be a reasonable reply.

7.3 Postal rule

It states that “ when the use of post is within the expectation of both parties ,the acceptance is complete and effective as soon as the letter is posted even though it may be delayed or lost altogether.

Case law Adams vs. Lindsell 1818

Postal rule does not apply where one party expecting immediate response or specified the the mode of communication and other party made acceptance through post.

Case law Holwell securities vs. Hughes